1. 2013 Cattle Market Situation and Outlook Derrell S. Peel Breedlove Professor of Agribusiness and Livestock Marketing Specialist

2. 2012 Recap Widespread drought in U.S. – Continued herd liquidation – Not as severe in Oklahoma this summer Limited water and forage for winter Record high grain and forage prices Record high cattle prices – Reduced cow-calf profitability – Poor feedlot and packer margins Higher wholesale and retail beef prices – Limited beef demand – Weaker beef exports

3. Livestock Marketing Information Center Data Source: USDA-AMS

4. Livestock Marketing Information Center Data Source: USDA-AMS

5. Livestock Marketing Information Center Data Source: USDA-AMS, Compiled & Analysis by LMIC

6. Livestock Marketing Information Center Data Source: USDA-AMS, Compiled & Analysis by LMIC

7. Livestock Marketing Information Center Data Source: USDA-AMS

8. 2013 Cattle Market Environment Continued drought? – More liquidation …Or normal weather – More heifer retention Tighter cattle supplies…into 2014 Beef demand is the key unknown – tied to general economy

9. Data Source: USDA-NASS, Calculations by Derrell Peel

10. 2013 Cattle Market Expectations Cattle and beef prices pushed higher by limited supplies – Beef production down by 4-4.5% Beef demand will limit price increases Question is How much higher? Moderation in feed prices Higher cow and heifer prices (if no drought) – Breeding cow and heifer demand

11. Commercial Beef Production Total Cattle Inventory Livestock Marketing Information Center Data Source: USDA-AMS, Compiled & Analysis by LMIC

12. Cattle Sector Implications Cow-calf – Good profit potential; cost management key – Rebuilding strategy and costs – Producer transition Stocker – Good value of gain Feedlots and packers will continue to struggle – Loss of capacity likely Production challenges bigger than marketing challenges

13. Price-Weight Relationship Medium/Large No. 1 Steers, 7 Oklahoma Auctions

14. Steer Price, Total Value and Value of Gain November 9, 2012, 7 Auction, Oklahoma Weight (lbs) Average Price ($/cwt.) Total Value ($/hd) VOG 400 lb. Beg. Weight ($/lb.) VOG 450 lb. Beg. Weight ($/lb VOG 500 lb. Beg. Weight ($/lb.) VOG 550 lb. Beg. Weight ($/lb.) VOG 600 lb. Beg. Weight ($/lb.) VOG 650 lb. Beg. Weight ($/lb.) 400$189.13$757 450$174.39$785$0.56 500$163.67$818$0.62$0.67 550$154.76$851$0.63$0.66 600$149.41$896$0.70$0.74$0.78$0.91 650$147.55$959$0.81$0.87$0.94$1.08$1.25 700$145.52$1,019$0.87$0.94$1.00$1.12$1.22$1.19 750$144.47$1,084$0.93$1.00$1.06$1.16$1.25 800$143.66$1,149$0.98$1.04$1.10$1.19$1.26$1.27 850$142.76$1,213$1.02$1.07$1.13$1.21$1.27 900$139.73$1,258$1.00$1.05$1.10$1.16$1.20$1.19

15. Livestock Marketing Information Center Data Source: USDA-AMS, Compiled & Analysis by LMIC

16. Agricultural Economics